Nitin Spinners Limited Q2 FY27 Post Results Conference Call

Financial Performance Highlights

Q2 FY27 Performance:

  • Total Revenue: ₹985.2 crores (vs. ₹760.1 crores in Q2 FY26), growth of 29.6% YoY
  • EBITDA: ₹175.5 crores (vs. ₹99.6 crores in Q2 FY26), growth of 76.3% YoY
  • EBITDA Margin: 17.8% (vs. 13.1% in Q2 FY26), expansion of 471 basis points
  • Profit After Tax: ₹88.7 crores (vs. ₹34.8 crores in Q2 FY26), growth of 155% YoY
  • EPS: ₹15.77 per share; Cash EPS: ₹22.57 per share

H1 FY27 Performance:

  • Total Revenue: ₹1,860.20 crores (vs. ₹1,553.4 crores in H1 FY26), growth of 19.8%
  • EBITDA: ₹331 crores (vs. ₹210.8 crores in H1 FY26), growth of 57%
  • EBITDA Margin: Improved by 423 basis points
  • PAT: ₹163.9 crores (vs. ₹75.8 crores in H1 FY26), growth of 116.4%
  • EPS: ₹29.16 per share; Cash EPS: ₹42.65 per share

Operational Metrics

  • Geographical Revenue Split: Exports contributed 68%, Domestic 32% of revenue
  • Capacity Utilization: Spinning capacity utilization over 98%, Woven fabric capacity utilization about 90%
  • Trial Production Impact: New capacity trial production contributed ₹21 crores revenue with EBITDA loss of ₹1 crore
  • Adjusted EBITDA Margin: Excluding trial production impact, EBITDA margin would be approximately 18.5%

Expansion Projects Update

  • Partial trials have commenced in all segments of expansion projects
  • Commercial production in all divisions expected to commence by end of December 2026 as planned
  • Renewable energy projects progressing per schedule, expected operational by end of December 2026
  • Renewable capacity increasing from 41 MW to 95 MW, meeting 50-55% of power needs post-expansion
  • Total expected revenue addition from new capacity: ₹1,000 crores annually
  • FY27 revenue contribution expected: ₹300-350 crores

Debt and Capital Structure

  • Peak term debt expected in March 2027: ₹1,440 crores
  • Working capital debt: Currently ₹400 crores, expected to reach ₹500+ crores
  • Total debt peak: Approximately ₹1,950 crores by March 2027
  • Annual debt repayment: ₹180-200 crores for next 6-7 years
  • Blended cost of debt: 6.5-6.75%
  • Interest subsidy: Approximately 2.5% on average

Management Commentary

Industry Outlook:

  • Favorable conditions for Indian textile industry, particularly upstream players
  • Yarn demand healthy with steady buying from major importing countries and domestic players
  • Domestic cotton prices: ₹67,000-68,000 per candy
  • International cotton prices: USD 0.80 per pound
  • Import duty exemption on cotton improved raw material availability
  • Domestic cotton prices remain at par with international prices, keeping Indian yarn competitive

Company Performance Drivers:

  • Better realizations
  • Optimum asset utilization
  • Higher share of exports
  • Cost-saving initiatives

Future Guidance:

  • Target revenue: ₹4,800-5,000 crores by FY29
  • FY28 modernization capex: ₹80-100 crores
  • Depreciation expected to increase to ₹53-54 crores per quarter (₹200+ crores annually)
  • Margin guidance: 16-20% range, currently in middle of range

Raw Material and Cost Environment

  • Cotton prices expected to remain in range of USD 0.75-0.90 per pound
  • Cost pressures observed on dyes, chemicals, coal, packaging costs, and freight
  • Sea freight costs increasing
  • Company implementing cost initiatives through automation, AI, energy saving, and alternative fuels

Q&A Session Highlights

Capacity Ramp-up Timeline:

  • Spinning capacity to reach 95%+ utilization by March 2027
  • Woven gray fabric to reach full capacity around same time
  • Finished fabric capacity to reach optimal levels by August-September 2027

Margin Sustainability:

  • Renewable power expected to provide 100-150 basis points cost benefit
  • Value-added products and fabric expansion to support margins
  • Target to maintain current margin levels of 17-18%

Export Markets:

  • 40% export growth driven by price increases (20-25%), dollar depreciation, and capacity diversion
  • No specific geography driving growth - broad-based across all regions
  • Bangladesh demand stable, no major freight issues

Receivables:

  • 40% increase in receivables primarily due to higher export sales
  • No extension of credit terms
  • No material overdue balances